Medicare planning for Part D

Wednesday

Nov 6, 2013 at 12:01 AM

During a recent workshop with seniors at my church, a debate broke out concerning Medicare Part D. That's the program that helps pay for prescription drugs. Medicare offers the coverage to all enrollees, and if you elect to get the coverage, you pay a monthly premium.

Michelle Singletary

During a recent workshop with seniors at my church, a debate broke out concerning Medicare Part D. That's the program that helps pay for prescription drugs. Medicare offers the coverage to all enrollees, and if you elect to get the coverage, you pay a monthly premium.

If you do not sign up for Part D when you're first eligible for Medicare Part A and/or Part B, and you didn't have prescription drug coverage that met Medicare's minimum standard, you may have to pay a late enrollment penalty if you eventually decide to join the plan.

Some of the seniors, concerned about facing that penalty, said they had enrolled in Part D even though they already had drug coverage as part of another plan.

"I'm not going to pay a penalty," one woman argued, with several others agreeing with her. But another senior tried to tell her that she wouldn't face a penalty if she later needed Part D. He was right: You don't incur a late penalty if you opt out of buying Plan D because you already have creditable prescription coverage or if you participate in the government program called Extra Help. This is a Medicare program that assists people with limited incomes and financial resources to pay for their prescriptions.

The key word here is "creditable," which means that your plan's coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. If you have drug coverage from an employer, union or other group health plan, you should get a notice every year letting you know whether your drug coverage is creditable.

"Keep that letter in a safe spot," said Nicole Duritz, AARP's vice president for health, education and outreach. "It can be difficult to get a copy of the letter if the business that was covering you closes down."

The bottom line is, if you have creditable prescription coverage, you don't need to double up on coverage by signing up for a Plan D out of fear you'll get hit with a penalty, Duritz said.

The late-enrollment penalty is calculated by figuring 1 percent for every full month that you were eligible but went without Plan D and didn't have other creditable coverage. That total percentage is then multiplied by what's called the "national base beneficiary premium," which for 2014 is $32.42. The resulting amount is rounded to the nearest 10 cents and added to your monthly premium.

You may decide to not sign up because you aren't taking medication. Although you save now, weigh that against a future penalty and whether you can afford it.

If you have concerns about Part D, go online to Medicare.gov or call (800) 633-4227. You can also talk to a counselor in your state who can help you get the answers you need through the State Health Insurance Counseling Assistance Program. Call (800) 633-4227 to find the number of the program in your state.

Contact Michelle Singletary, a financial columnist at The Washington Post, at michelle.singletary@washpost.com.